This article argues that pension scheme trustees must take systemic risks, like climate change, pandemics or financial crises seriously, as they can destabilise entire markets and threaten the ability to pay member benefits. Unlike normal market shocks, systemic risks create lasting damage without quick recovery, undermining both portfolios and the broader economy. Traditional risk models fail to capture them, making proactive attention essential.

Managing these risks is not only good risk management, but also the right thing for members, helping protect both pensions and long-term quality of life. Recent regulatory guidance makes clear that addressing systemic risks is part of trustees’ duties, underscoring the need for action rather than complacency.

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